‘Greeks avoid investment at home’
Werner Hoyer’s office is located at the brand-new, energy-friendly headquarters of the European Investment Bank in Luxembourg. We are welcomed by the bank’s German president and seven of his aides, all sitting around a big table. Hoyer likes to be precise. After all, he helms the world’s biggest lending institution, with total assets of 512 billion euros at the end of 2013.
The shareholders of the EIB are the 28 members of the European Union. The bank enjoys an AAA rating, so nation-states do not have to pay annual contributions. It borrows money on the capital markets and lends it at a low interest rate to member states that need to finance large projects – it is no coincidence that Hoyer has a picture of the Rio-Antirio bridge in central Greece hanging on his office wall – but also, and more so during the crisis, to many small and medium-sized enterprises (SMEs).
The EIB has financed more than 700 Greek SMEs since 2011, but it is still treated with skepticism by many in Greece who say the bank could have done more to help the debt-hit nation.
“When I came here I was stunned by the cheap criticism about the bank, that we did not do enough,” Hoyer says. After the crisis broke out, and amid the discussions about Greece’s possible euro exit, the bank “did business in Greece when everyone was gone,” he says. Funding to Greece currently stands at 9 percent of GDP, which puts Greece in fourth place among its EU peers, while in 2013 the amount of funding doubled compared to the previous year, reaching 1.5 billion euros.
However, despite the increased liquidity from the EIB, the money does not seem to be reaching Greece’s SMEs. Hoyer acknowledges the problem, which he attributes to the country’s infamous bureaucracy. He got to experience it firsthand. “We were able to finance Greek motorways years ago but the contractual situation with the concession was such a disaster that it took years to sort out and enable us to resume. I am very happy that the machines are running again. It took us almost two years to negotiate with the concession holders,” he says.
Another important problem is the slow and complex decision-making. “Sometimes the trickling down of political decisions from top institutions to the local level where the actual decisions are taken is impressive,” he says.
Also, for funds to reach their targets, Hoyer says, a lot depends on the shape of Greece’s four systemic banks, which serve as mediators between the EIB and SMEs. Hoyer mentions that SMEs often complain that Greek banks fail to help them. “In some cases I ask colleagues to go and check what is going wrong there,” he says, adding however that the EIB is not there to provide money “just to keep the engine running.”
“It’s an investment bank at the end of the day,” he says, and its purpose is to finance new business projects.
A third problem identified by Hoyer is that they do not get many proposals from Greek companies, compared to other EU countries of the same size. “The rich people in Greece are not exactly very ambitious in Greek investments. That’s the big problem in Greece. They prefer to invest in the UK,” he says.
Come with a good idea and we will finance it, Hoyer says, adding that the EIB has the necessary experience and know-how to back a good project. “The problem in Europe is not that there is not enough liquidity, but that there is not enough demand for financing new projects. We have a lack of good, strong projects and ideas,” he says.
Asked whether, in his view, some projects are more “bankable” than others, the German banker says there is no exact formula. However, he points out, Greece appears to have a comparative advantage in two areas: logistics, where investors from China to the US have shown a keen interest, and tourism. However, he adds, when compared to other countries in Europe and the rest of the world, Greece suffers from weaknesses in the areas of productivity and innovation.
“We are ready to do more both in the private and public sectors to strengthen research and innovation in Greece, if there are projects. The capacity is there. If you look at science organizations you will find Greek researchers of the highest global quality. The problem is they sometimes work under extremely hard conditions. It would be very beneficial for the long-term strengthening of the Greek economy,” Hoyer says.
At the end of the interview, Hoyer asks if he can add a few words about Greece’s former Finance Minister Yannis Stournaras and the conservative-led government’s recent efforts.
“Stournaras has done a remarkable job, and with such effect and expertise. In this ministry you cannot be a popular man. You run the risk of making mistakes but what he has done is enormous,” he says.
“I tell my countrymen, who have a tendency sometimes to believe they are the greatest, to look what kind of decisions [Prime Minister Antonis] Samaras and his team have taken upon their shoulders against the public mood,” he says.
“This would not have been possible in Germany or Denmark. It might not be enough because, no question, there is still more to be done, but we should have an extremely high degree of appreciation of what kind of difficult decisions the political leaders in Greece have taken upon their shoulders,” he says.
“Jokingly, I often tell my countrymen, ‘Learning from Greece means learning how to win.’”